Operating Income Rises 27 Percent Over Q1, Excluding Acquisition Charges
SAN JOSE, Calif., July 27 /PRNewswire/ -- SDL, Inc. (Nasdaq: SDLI) today
announced record revenues and income before one-time merger expenses for the
second quarter ended June 30, 1999. Second quarter revenue was a record
$43.2 million, including $2.5 million from IOC International plc, acquired in
May 1999 in a transaction accounted for as a pooling-of-interest. This is a
52 percent increase compared to $28.4 million for the corresponding 1998
quarter. Excluding IOC from both 1999 and 1998 results, second quarter 1999
revenue increased 58 percent versus the second quarter of 1998. Sequentially,
total revenue increased 15 percent from the combined $37.7 million reported
for the March 1999 quarter.
Including merger expenses, SDL reported net income for the second quarter
1999 of $3.2 million or $0.10 per share on a diluted basis. The quarter's
costs include $2.7 million of non-tax deductible merger expenses, or $0.08 per
share, related to completing the IOC acquisition.
Before merger expenses, and as illustrated in the table below, operating
income was a record $7.3 million for the quarter and was 16.8 percent of
revenue. Excluding IOC, operating income was a record $7.7 million.
Consolidated operating income increased by 27 percent over the March 1999
quarter and by 522 percent over the prior year quarter. Excluding IOC, the
operating margin increased to 18.9 percent versus 17.4 percent in the first
quarter and 11.0 percent in the second quarter of 1998. Net income, excluding
merger expenses, was a record $5.9 million, or $0.18 per diluted share, up 380
percent from $1.2 million, or $0.04 per diluted share, in the second quarter
of 1998. The second quarter diluted earnings per share were computed based on
33.0 million shares, compared to 30.3 million shares in 1998.
(in thousands, except per share amounts) 1999 1998
Revenues (c) $43,171 $28,386
Gross Margin 18,198 8,793
Income from operations (a)(d) 7,253 1,166
Income before income taxes 7,550 1,470
Net income (b) 5,889 1,228
Net income per diluted share (b)(d) $0.18 $0.04
Diluted weighted average shares outstanding 32,961 30,304
(a) Income from operations for the quarter ended June 30, 1999, excludes
$2.7 million of merger expenses related to completing the acquisition
of IOC International in May 1999.
(b) Net income for the quarter ending June 30, 1999 reflects an effective
tax rate of 22 percent on income before taxes. For the quarter ended
June 30, 1998, an effective tax rate of 16 percent on income before
taxes has been applied.
(c) Excluding IOC, revenues for the quarter ended June 30, 1999, were
$40.7 million, a 58 percent increase from $25.8 million in the second
quarter of 1998.
(d) Excluding IOC, income from operations for the quarter ended June 30,
1999, was $7.7 million and net income per diluted share was $0.20.
For the six months ended June 30, 1999, SDL reported record revenue of
$80.8 million, up 46 percent compared to revenues of $55.3 million in the
first six months of 1998. Excluding acquisition-related charges, net income
for the same period was a record $10.6 million or $0.32 per diluted share,
compared to net income of $2.6 million or $0.09 per diluted share in the first
half of 1998. Diluted earnings per share for the first six months of 1999
were computed based on 32.6 million shares, compared to 30.1 million shares
for the first six months of 1998.
Commenting on the quarter's performance, SDL's Chairman and Chief
Executive Officer, Donald R. Scifres, said, "We are very pleased with our
revenue and profit growth in the second quarter. This growth was driven
primarily by our fiber communications product lines that serve the long haul
terrestrial, undersea and CATV markets. Demand for these products was up
174 percent over the year earlier quarter. This growth was clearly a
highlight for the quarter."
Scifres continued, "Another highlight was the closing of our acquisition
of IOC International which makes 2.5 and 10 Gb/sec light modulators for fiber
communications systems. IOC also had an outstanding quarter, growing 30
percent sequentially, and last week signed a significant agreement for 10 Gb
light modulators. We are very excited about our prospects for rapid growth in
this key DWDM market."
Statements in this press release which are not historical including
statements regarding SDL's or management's intentions, hopes, beliefs,
expectations, representations, projections, plans or predictions of the future
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements include statements regarding
prospects for rapid growth in the DWDM 10 Gb modulator market. It is
important to note that the Company's actual results could differ materially
from those in any such forward-looking statements. Factors that could cause
actual results to differ materially include risks related to uncertainties in
competition in and customer demand for DWDM products, and the risk factors
listed from time to time in the Company's SEC reports including but not
limited to, the annual report on Form 10-K and 10-K/A for the year ended
January 1, 1999, and the Company's quarterly report on Form 10-Q for the first
quarter of 1999.
SDL's products power the transmission of data, voice and Internet
information over fiber optic networks to meet the needs of telecommunications,
dense wavelength division multiplexing (DWDM), cable television and satellite
communications applications. They enable customers to meet the bandwidth
needs of increasing Internet, data, video and voice traffic by expanding their
fiber optic communications networks much more quickly and efficiently than
would be possible using conventional electronic and optical technologies.
SDL's optical products also serve a variety of non-communications
applications, including materials processing and printing. Additional
information about SDL, Inc. is available on the Internet at http://www.sdli.com .
SDL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME(a)
(in thousands, expect per share data -- unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
Total revenues $43,171 $28,386 $80,837 $55,299
Cost of revenues (b) 24,973 19,593 48,006 38,261
Gross Margin 18,198 8,793 32,831 17,038
Operating expenses
Research and development 4,292 3,281 8,073 6,142
Selling, general and
administrative 6,443 4,153 12,123 7,983
Merger costs 2,677 -- 2,677 --
In-process research and
development -- -- 1,495 --
Amortization expense 210 193 389 389
Total operating expenses 13,622 7,627 24,757 14,514
Operating income (loss) 4,576 1,166 8,074 2,524
Interest income, net 297 304 583 597
Income before income taxes 4,873 1,470 8,657 3,121
Provision for income taxes 1,661 242 2,823 472
Net income $3,212 $1,228 $5,834 $2,649
Net income per share
-- basic (c) $0.10 $0.04 $0.19 $0.09
Net income per share
-- diluted (c) $0.10 $0.04 $0.18 $0.09
Number of weighted average
shares -- basic (c) 30,947 28,564 30,518 28,442
Number of weighted average
shares -- diluted (c) 32,961 30,304 32,554 30,149
(a) Prior periods have been restated to reflect the acquisition of IOC
International plc on a pooling-of-interest basis. The three and six
month periods ended June 30, 1998 are combined with IOC's three and
six month periods ended March 31, 1998, and the three and six month
periods ended June 30, 1999 are combined with IOC's three and six
month periods ended June 30, 1999.
(b) Includes one-time charges of $0.7 million related to the Polaroid
fiber laser acquisition in the quarter ended March 31, 1999.
(c) Share and per share data applicable to prior periods has been
restated to give retroactive effect to a 2-for-1 stock split in the
form of a stock dividend effected in May 1999.
SDL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
1999 1998 (a)
(unaudited)
Assets
Current assets:
Cash, cash equivalents and marketable
securities $27,575 $34,658
Accounts receivable, net 34,754 23,042
Inventory 27,076 21,288
Other current assets 3,875 3,875
Total current assets 93,280 82,863
Property and equipment, net 49,556 39,848
Long-term marketable securities -- 3,552
Other assets 8,435 5,797
$151,271 $132,060
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $12,813 $10,014
Other accrued liabilities 14,588 9,144
Total current liabilities 27,401 19,158
Long-term liabilities 4,534 4,696
Stockholders' equity 119,336 108,206
$151,271 $132,060
(a) The prior period balance sheet has been restated to include IOC on a
pooling-of-interest basis. Because of different year ends, the
December 31, 1998 balance sheet includes the accounts of IOC as of
September 30, 1998.
SOURCE SDL, Inc.
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Related links:
http://www.sdli.com
CONTACT:
Donald R. Scifres, Chairman and CEO, or
Michael L. Foster, VP Finance and CFO, of SDL, Inc.,
408-943-9411; or general, Lisa Horn Chainey, investors, Kristi
Larson, or media, Scott Marx, of The Financial Relations Board,
415-986-1591
NOTE TO EDITORS: For more information on SDL, Inc. at no cost,
please call 1-800-PRO-INFO (U.S.) or 908-544-2850 (Int'l), ticker
SDLI
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